Do you know where your money goes every month? That’s what I’m talking about this week, on the One Minute Retirement Tip.

Today, I really want to stress the importance of why you absolutely need to budget and know what’s coming in and what’s going out every month BEFORE you enter into retirement.

Let’s say you spend $5000/month. Currently, while working, your take home pay is $6000/mo. That’s great. But what happens when you retire and your income drops to $4,000/mo. For people who don’t budget, they get blindsided by this. And they usually either live in denial and keep spending that $5000/mo even though they can only afford to spend $4000, quickly draining their portfolio, or they make drastic decisions, that are sometimes unnecessary - like getting on one of those tiny house or couponing shows.

But when you budget and understand what you’re spending and what you’ll need to live in retirement, BEFORE you retire, you’ll have the breathing room to make smarter decisions about what to do about that $1000 shortfall. You’ll have more options. Maybe that shortfall is just too big, so you decide to work another year. Or maybe you can do some part time work to cover the shortfall...whatever it is, we need to know the gap so you can figure out how you’ll close it.

The budget is the only way you’ll figure out what the gap is and how big it is, so you can deal with it in a smart way.  

Or, better yet,  if you don’t have a shortfall, the budget will give you peace of mind that you really can afford to retire.

That’s it for today, Thanks for listening! Tomorrow, come on back because I’m answering a question I get asked all the time - how much do household expenses for Americans really change in retirement.

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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